New GAMMA Tokenomics: Charting the Path to Long-Term Sustainability
Where are we now?
Since February 2023, we’ve experienced a surge in demand for our services. QuickSwap, Thena, and Zyberswap were our first integrations, and many others have followed.
To date, we’ve partnered with more than a dozen DEX partners on 14 different networks (https://defillama.com/protocol/gamma ), accumulating over $100M in TVL at one point. It’s a testament to our agility and scale of operations that we’ve achieved market leadership in number of integrations and revenue generation.
Since inception, the GAMMA tokenomics model has been centered on distributing protocol revenues to stakers, where our protocol revenues are bridged to Ethereum, swapped for GAMMA, and paid out to stakers. Gamma’s operations have been funded purely by the capital we have raised until recently.
Thanks to Gamma’s success, we have reached a critical milestone where the protocol revenues are able to cover all or a majority of operating expenses in recent weeks. See here: https://dune.com/rchen8/gamma. Going forward, we will be directing at least 10% of gross revenues to stakers while assuring operational costs and R&D are met, with any surplus after costs going to stakers. Doing so will significantly increase the likelihood that Gamma’s value and utility will last through multiple market cycles.
New Tokenomics & Staking Contract — Lock GAMMA to earn ETH
In the coming weeks, we will be releasing a new GAMMA staking contract, which at a high-level will include locked staking and voting, in addition to a bonus reward pool eligible solely to stakers. One of the main draws of this staking mechanism is that rewards will no longer be paid in GAMMA, but in ETH.
Vote-Locked GAMMA (vlGAMMA)
Stake GAMMA for vlGAMMA and receive the following multipliers on ETH revenue distributions and voting power:
- 1-month lock = 1x multiplier
- 1-year lock = 2x multiplier
- 2-year lock = 3x multiplier
- 4-year lock = 5x multiplier
The fee distributions will be based on 1-month long epochs, which represents the minimum lock period.
Our fee revenues earned on every chain will be swapped for ETH and bridged to Ethereum to be distributed to the vlGAMMA holders.
The regular ETH distribution going to vlGAMMA stakers will be at least 5% of the total protocol revenues.
Voting and Bonus Reward Pool
vlGAMMA holders will be able to vote for any pair that Gamma is managing on any network and on any DEX. LPs who provide to the winning pair will be eligible to receive a portion of the bonus pool rewards in the following epoch, so long as they hold vlGAMMA.
At least 5% of the protocol revenues will be sent solely to the bonus reward pool. To reiterate the revenue distribution, at least 5% of protocol revenues will be sent to the vlGAMMA stakers and an equivalent amount will be sent to the Bonus Reward Pool.
To illustrate an example, a vlGAMMA staker who locks for 1 month and provides liquidity to the Bonus Reward Pool LP pair will receive a 1x multiplier on both the regular ETH distribution and a 1x multiplier on the additional Bonus Reward Pool based on the time-weighted average amount of liquidity provided during the epoch. If protocol revenues for the month are $100,000 then at least $5,000 will be sent to the vlGAMMA stakers and at least another $5,000 will be sent to the Bonus Reward Pool.
Bribes
Bribes may additionally be paid by our partners to bribe vlGAMMA holders to vote for their selected pair. More importantly, any bribes paid for their pairs that do not win are eligible to be refunded. Therefore, there is no cost to the bribers unless they win.
Why Bribe?
- Receive at least 5% of GAMMA’s protocol revenues in ETH as incentives towards your liquidity pool
- These ETH rewards will be compatible with and in addition to any rewards currently going to your liquidity pool
- Your pair will be featured on the main page of our web app and announced via our socials as “the bonus pair of the month”
Conclusion
- Lock GAMMA for vote-locked GAMMA to earn ETH rewards
- At least 10% of protocol revenues will be split between vlGAMMA holders and the new bonus reward pool
- The bonus reward pool is eligible to anyone who holds vlGAMMA and provides liquidity to a selected pair
- vlGAMMA holders may vote to elect a new pair eligible for bonus pool rewards every epoch
- Other protocols may bribe vlGAMMA holders to direct ETH rewards to their pools
The main goal with this new staking contract and tokenomics model is to align the interests of long-term holders and LPs with the best interests of the protocol.
Our revenue model is based on the fee generation and bribes earned from our managed positions. So it would logically follow that GAMMA tokenomics are geared towards increasing fees earned from our liquidity positions and bribes.
The additional appeal of earning ETH rewards is the icing on the cake to further demonstrate our commitment to a fully sustainable system.
Over the coming months, we will be staking incremental amounts of treasury GAMMA and sending larger revenue distributions to the staking contract and bonus reward pool. At any given time, at least 10% of protocol revenues will be going to non-treasury stakers. Long-term, we intend to fully sustain ourselves with 100% of the revenues going to stakers with the treasury earning its due portion from staked GAMMA.
We are very excited to launch our new tokenomics and governance model, and look forward to taking feedback from the community!
